In an in-depth conversation with Entrepreneur magazine, Shopify President Harley Finkelstein shared his thoughts on the entrepreneurial renaissance that’s happening right now. An increasing number of people are quitting their jobs to pursue their entrepreneurial dreams. The due credit goes to the ever-changing technology that offers less risk and more rewards for emerging entrepreneurs.
The Shopify President talked in length about strategies and best practices that can be adopted for e-commerce growth.
The ingredients for businesses today are just different. Historically, the most important ingredient for starting a business was capital — you needed money. And now, it’s more about creativity than it is about capital. It’s more about being resourceful than having resources.
Harley Finkelstein, President, Shopify
Massive Revolution
In the conversation with Entrepreneur magazine’s Editor in Chief Jason Feifer, Finkelstein emphasized that the e-commerce revolution is massive. He dropped a few points that small companies can take care of to give big brands a run for their money.
“Applications for new businesses are up 20%, and Google search terms for 2022 included a rise in terms like ‘How can I find my passion?’ and ‘How can I change careers?’ You’re seeing this shift from how to get a job to how to create my own job,” said the Shopify President.
“During the pandemic, you saw a lot of people begin to look at their hobbies through a different lens. Instead of looking at their hobby as the thing that they play with and tinker with on nights and weekends, people began to think, ‘Hey, can I actually turn my hobby into a monetizable business?,'” said Finkelstein.
“If you look at the U.S. alone, applications for new businesses have been approximately five million per year for 2021 and 2022. That is one million more — or about 20% more than the previous five years,” he added.
Changing Landscape
Explaining how the e-commerce scenario has changed over time, Finkelstein explained, “The ingredients for businesses today are just different. Historically, the most important ingredient for starting a business was capital — you needed money. And now, it’s more about creativity than it is about capital. It’s more about being resourceful than having resources.”
Below are the edited takeaways from Finkelstein’s conversation:
1. Tough Start
Starting a new business has never been this easy, says Finkelstein. Even though your new idea fails to garner customers, you are not at risk of a financial crisis, he says. The Shopify President considers Kevin Kelly’s blog post called 1000 True Fans, a sort of bible. It states that while starting a business, one doesn’t need a million or 2 million or 10 million subscribers or fans. All you need is a small and stable base of people who want to purchase your products. They believe in you and want to support you.
“And I think that new entrepreneurs need to consider that when you compare starting a business today to starting a business 5 or 10 years ago, the cost of failure of starting a business in 2023 is as low as it’s ever been. This isn’t a promotion for Shopify, but there are tools out there that make it very easy to get started at your mom’s kitchen table. Now, that business may grow into the next Allbirds or the next big thing, but if it doesn’t, it’s okay. You’re not taking food off your table or losing the roof over your head because you’re starting a new business,” said Finkelstein.
2. Nothing Lasts Forever
No idea is forever, hence, avoid getting married to your first idea. One needs to iterate on an idea, says Finkelstein. “I think we need to change our perception of what we view failure as. One thing I’ve noticed about multi-billion dollar companies — the FIGS or the Bombas of the world — is that when they started out, that wasn’t their original idea.
“They sort of iterated on an idea or they thought about something in the shower one morning that ended up turning that small company into a big company. So don’t get married to your first idea. And appreciate that you may need to try a couple of different things to see what works best. If it works, scale it. If it doesn’t, move on to something else,” said the Shopify President.
3. Small Is Bigger
Small businesses have the power to be part of the community they are serving. They can closely connect to their customers which big brands fail to do. Talking about the same, Finkelstein said, “Authenticity is a timeless characteristic of successful brands. An advantage that small businesses have over large companies is they can be a lot more agile, more reactive and they can be more authentically connected to their customers. Here’s a small business that I love: Bleusalt.
“They make my favorite hoodie that I wear almost every day. It’s run by a great entrepreneur named Lindy. Whenever Lindy sees me wear it while I’m doing interviews, she’ll send me a note: ‘Hey, that Bleusalt hoodie looks a little bit worn down, so here’s a coupon code.’ Or ‘I’m just sending you another one.’ She pays attention to her small community of very loyal fans, which is something the biggest companies on the planet don’t do because they have this massive infrastructure. When you’re small, you absolutely can do those things.”
4. Ask For Help
Ask for help from your fellow merchants. Do not hesitate to take tips and advice from your followers. Internet works in a different way from traditional business. “If you go back to the history of business, there was sort of this competitiveness. If I had a business on Main Street and you had a business as well, the idea that I would ever share my secrets or best practices with you was kind of unheard of. But the internet is not like that. We have completely shifted from the zero-sum entrepreneurial model to a positive-sum model,” says the Shopify President.
“If you go to any social media platform right now and post, ‘I’m starting a business right now. Here are my products. Any advice for me to get my first 10 sales?’ Even if you have just 10 followers, people are going to respond and give you their tips, because the total adjustable market for online retail is effectively the same as oxygen, right? The entire world with internet connectivity may be a consumer. And when you look at Shopify’s merchant base — we’re about 10% of all e-commerce in the U.S. — you see this incredible community of merchants and entrepreneurs sharing what worked for them, what keywords they’re using, what new ad platforms you’re using, how much they’re spending, what their CPM is, and the like. I mean, it is quite incredible,” he added.
5. Customers Engagement
Build a relationship with your customers by engaging with them directly. That’s how you encourage them to become frequent buyers of your products. Instead of email bots, send them personalised messages from your email address and ask for feedback.
“With existing customers, you want to increase your engagement with them. You want to increase your relationship and get to know them better. You want them to become frequent buyers of your products as opposed to one-time buyers. When you go to your Shopify dashboard to see orders coming in, you see a lot of signals,” says Finkelstein.
“So, for example, if someone bought a package of Fire Belly tea from me on Monday from me, and then on Wednesday and then on Friday…Okay, something is up here. Either they love this so much or they’re buying it for gifts. I usually just email that person directly from my email address and I say, ‘Just want to say thank you so much for buying my tea. Is there any feedback, positive or negative, that you have for me?’ And often they’ll just write back and say, ‘No, I’m good.’ But sometimes they’ll give a great gem of insight that will help me create a better product or better buying experience. The checkout is too slow or they’d like to see more bundling options, for example. But besides the feedback, they’ve established a relationship with me — a person, not my tea company. It’s authentic and it’s real. And they now may actually buy all their tea from me,” he further added.
6. Influencer Marketing
For influencer marketing, the content creator doesn’t need to have a lot of followers. According to Finkelstein, even those with a small community can “help introduce you to a brand-new demographic”. Get in touch with them and send them a few free products to try. That’s how you grow.
“The most important idea or concept around content creation and influencer marketing in any community is that there are usually one or two people who are incredibly relevant in that community. Someone who is a role model or sort of a centerpiece of that community. That person doesn’t have to have a lot of followers, but if you can develop a relationship with that person — send them some free products to try — they can help introduce you to a brand-new demographic. Likewise, with podcasts and YouTube shows, you don’t only have to go on the biggest shows in a community.
“There are micro-communities that no one else cares about. Get in touch with them and give them something to try. If they like it, they will start talking about you and sharing more about your business and your products,” said the Shopify President.
